Morning Forex Fundamental: GBP

Morning Forex Fundamental: GBP

"The U.K.'s factories are booming again. Orders and output are growing at the fastest rates for almost 20 years, as rising demand from domestic customers is being accompanied by a return to growth of our largest trading partner, the euro zone.' - Rob Dobson, senior economist at Markit

Another bunch of stronger-than-expected data from the U.K. came out on Monday, as manufacturing index climbed to its highest in 2 1/2 years, while new orders accelerated at the fastest pace in almost 20 years, boosting hopes the recovery is broadening and the economy will continue strengthening in the coming months. Britain's factory index soared to 57.2 in August, from a revised 54.8 recorded in July, outpacing analysts' estimates for a 55 reading. This level is the highest since February 2011. A report also showed the subindex for new orders leapt to 61.8 last month, from 58.6 in July, supported by strong domestic demand. As manufacturing sector accounts for almost one-tenth of domestic economy, these reports will be welcome news from BoE's Governor Mark Carney, who pledged to keep interest rates at record-low until unemployment fall to 7%, which is expected to happened in late 2016. However, many investors are seeing jobless rate falling even faster.

The latest figures are suggesting the economy will pick up pace in the third quarter, after expanding 0.7% in the previous three months. The Bank of England is most likely to keep the pace of its bond-purchase programme on hold during its September's policy meeting. In terms of the GDP outlook, most of the British economy watchers have so far upgraded their growth projections for the next two years.